Germany’s coalition on the verge of collapse, more drama for Europe

The political drama in Germany is heading toward a new act. Opposition leader Friedrich Merz called for Chancellor Olaf Scholz to face a confidence vote by next week, setting the stage for potential elections as early as mid-January. With Germany’s three-party coalition on the verge of collapse amid bitter infighting, Scholz’s grip on power appears to be slipping.

The Chancellor, a Social Democrat, ended his uneasy alliance with the Greens and the fiscally conservative Free Democrats (FDP) by firing Finance Minister Christian Lindner—a move some would call bold, others would call desperate. Scholz now seems intent on delaying elections until March to buy his beleaguered party time to regroup, but Merz and his CDU/CSU alliance, riding high in the polls, are eager for a sooner date.
Lindner, not one to miss a political opportunity, quickly backed Merz’s push for an early vote, initially scheduled for September 2025.

The Chancellor’s decision to sack Lindner, severing his coalition’s majority in parliament, caught even seasoned political observers off guard. However, the alliance had been teetering on the edge for weeks over economic and fiscal disputes. It’s a risky play for the 66-year-old Scholz, who may recall that his party’s last foray into snap elections in 2005 ended with Angela Merkel’s ascent to a record-breaking 16-year stint as Chancellor.
Scholz, however, is pushing to hold off on a confidence vote until January to pass some crowd-pleasing measures—like tax cuts for workers and support for German manufacturers. His supporters argue this would give the SPD a fighting chance, but one wonders if the electorate’s patience will hold out that long.

As Merz eyes the Chancellor’s office, his potential leadership would likely be met with relief in some European circles, given his strong stance on supporting Ukraine and resisting China’s influence. Yet, his alliance is less enthusiastic about European solidarity regarding debt, pledging to stand firm against any new joint EU borrowing initiatives. This position could put Germany at odds with Brussels.
And then there’s the far-right Alternative for Germany (AfD), now polling second after Merz’s CDU/CSU, leaving Scholz’s SPD trailing in third place with a somewhat underwhelming 16%. With the FDP barely scraping together 3%, below the threshold for entering parliament, it’s clear that the coalition’s popularity—or lack thereof—has made the prospect of a snap election all the more appealing to the opposition.

In his typical cautious manner, President Frank-Walter Steinmeier stated that he would consider dissolving the Bundestag if Scholz lost a confidence vote, adding that “Germany needs stable majorities and an effective government.” His comments come as Europe watches nervously, especially given the backdrop of Trump’s recent election victory in the U.S., which has only heightened uncertainty on both sides of the Atlantic.
According to a recent ARD poll, a majority favours snap elections, and only 14% of Germans express satisfaction with the government’s performance; Scholz faces an uphill battle. The head of the DIHK, Germany’s industry lobby, voiced the business community’s frustration, stating that the coalition’s implosion has added yet another layer of uncertainty for companies.

The sentiment is shared across Germany and beyond amid an economic slowdown, geopolitical tensions, and internal discontent. It’s time for a government with a clear mandate. With Merz poised to steer Germany towards a more conservative and possibly more Eurosceptic direction, Europe should brace itself for yet another chapter in the continent’s ongoing political saga.

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